Lubbock stays on course despite economic bumps

Published: Sunday, January 31, 1999

MIKE W. THOMASAvalanche-Journal

Lubbock took a roller-coaster ride in 1998, buoyed by a strong national economy and low unemployment with sudden scary dips caused by the pullout of Texas Instruments and the merger of St. Mary and Methodist hospitals.

It could have been a really good year if it weren't for the long drought and the slump in oil prices. But those factors hurt two of the region's most powerful economic engines and threaten to put a damper on the city's economic prospects during the early part of 1999.

Still, the city's economy held steady in 1998 against regional economic pressures that would have been devastating 15 years ago, according to an analysis by the Lubbock Chamber of Commerce.

''The economy seems to be in a holding pattern at this point, relatively flat since June, and looking for direction primarily from the consumer front,'' states the chamber report.

Cheryl Brock, an analyst with Market Lubbock Inc., said the city's economy was robust during the first half of 1998 but leveled off by mid-summer. The biggest drag on the good times may have been the drought's effect on the South Plains cotton crop.

The cotton production estimate for 1998 was 2.53 million bales nearly 1 million fewer than the total production for 1997 and slightly lower than the 10-year average. With cotton such a huge portion of the Lubbock economy, the city's retail industry undoubtedly will suffer when area cotton farmers find themselves with less money in their pockets this year.

''The real hit will come in the first quarter of 1999,'' Brock said.

The oil slump is another blow to the Lubbock economy, though not as directly as the cotton troubles. Lubbock itself doesn't have that many jobs in the oil industry, Brock said, but the small towns in the region do, and they are being hit hard by layoffs. The folks in the region who are being hurt by the oil slump do a lot of shopping in Lubbock, Brock said.

Sales tax collections through November were up approximately 1.2 percent over 1997 but had been declining during the latter part of the year. Sales tax figures for December will not be available until late February.

Anna Mosqueda, director of management services for the city of Lubbock, said steady sales tax revenues and good financial management have kept the city on course.

''(1998) was kind of like a roller coaster,'' Mosqueda said. ''We had some ups and downs but we ended the year on a very solid financial foundation.''

The city did not see the kind of growth in sales tax revenues like it has in recent years, Mosqueda said, but a stable revenue source is preferable to a declining one.

''In terms of the general economy, we are cautiously optimistic,'' Mosqueda said. ''There are communitywide concerns about the cotton crop and the impact of the hospital mergers, and we could see a delayed reaction from the loss of jobs and reduced spending. But we have also seen a lot of new things happening in the community that are looking good building permits have been strong and we have new retail businesses moving in.''

New home permits increased from 542 in 1997 to 664 in 1998, but the valuation on the new homes was down from $90.6 million to $73.5 million. Likewise, non-residential building permit valuations were down from a total of $78.8 million in 1997 to $63.2 million in 1998. However, city officials say the decline was expected because 1997 had seen an unusually large burst in construction activity.

Mosqueda said that because the city projects its annual budget conservatively and maintains a two-month reserve fund, it is prepared for any sudden downturn in the economy provided it does not last too long.

Mayor Windy Sitton points to the city's low unemployment rate currently the second lowest in the state as evidence of a strong local economy. But at the same time, she said she is concerned about the city's future growth without more investment in economic development.

She said the city must be more aggressive in its efforts to attract new businesses and new people. Last year Lubbock grew at a paltry rate of 0.2 percent, she said.

''That slight increase was due to the number of births over deaths, not from new people moving in to our community,'' Sitton said.

When people drive around Loop 289 and see new restaurants being built, they get the impression that the city is growing rapidly, Sitton said. But what they do not see are the restaurants elsewhere being forced to close.

''We may have to cut some things in order to grow,'' Sitton said, referring to a recent task force recommendation that the city devote a portion of its annual budget to economic development efforts.